The cruise ship ‘Carnival Sunrise’ is seen moored at a quay in the port of Miami.
Daniel SLim/AFP via Getty Images
Analysts don’t expect smooth sailing for cruise giant Carnival .
Stifel and Wells Fargo both lowered price targets on Carnival (ticker: CCL) stock on increased fuel costs and macro pressures—one analyst is long-term bullish while the other is a bear.
Stifel analyst Steven Wieczynski lowered his price target on Carnival to $20 from $30, and slashed his 2022 to 2024 estimates for earnings before interest, taxes, depreciation, and amortization, or Ebitda, by 17%. He wrote in a research note that “we believe it makes sense to now incorporate a recessionary environment into our estimates given we believe that is already somewhat priced into shares.”
Most of Wieczynski’s estimate reductions are tied to higher fuel prices.
Wieczynski maintained his Buy rating on Carnival stock, however, and wrote that “we still see value with CCL shares for the longer-term investor who can stomach some near-term volatility until we get more clarity around the macro backdrop.”
Wells Fargo analyst Daniel Politzer cut his price target on Carnival stock to $13 from $21, and maintained an Underweight rating. He also lowered his Ebitda estimate for 2022 to a loss of $1.3 billion from a gain of $689 million. For 2023, his Ebitda estimate fell to $4.8 billion from $5.4 billion.
Politzer wrote that he remains cautious on Carnival given its international footprint, “which can be a challenge during periods of geopolitical tensions,” and less-predictable earnings given fuel price volatility.
Last week, Carnival reported a disappointing second quarter. But booking volumes for future sailings in the second quarter nearly doubled from the first quarter.
Stifel’s Wieczynski noted that these booking patterns remain healthy to him and that “while cruise vacations typically hold up well in tougher economic times, we believe this time around could be even ‘better’ for cruise operators given the low unemployment levels as well as significant pent-up savings levels.”
Carnival stock is 4.7% lower in Monday morning trading to $10.34, while the S&P 500 is down 0.4%. Coming into Monday trading, the stock has slipped 46% so far in 2022, and has dropped 59% in the past 12 months.
Write to Angela Palumbo at [email protected]
